What do I effectively do with £290,000

meunier

Perhaps you can help me.

I am to be 60 years old in July and am in decent health. I own my own home in London and have no mortgage. For 12 years I have lived off the interest of my savings and primarily done charity work. I teach occasionally on the University level but this makes no more than £3,000 per year. I run a charity but do not take a salary. I have £290,000 in savings at the moment and these are spread across a series of fixed five year term instruments paying between 4 and 4.5 percent interest on a monthly basis. I use this income to keep me going. I can manage with this ... Certainly I have learned to do so ... relatively happily so.

Still, I'm worried. The above listed fixed interest instruments come due next November. (They were all last registered at the same time.) I know the rates are now rock bottom and it has been concerning me. I could take the difference on the current same and add it to what I could/might achieve at current levels on say a one year basis and hope that the rates rise ... I could do that safely (i.e., with the official assurance). Still I don't know if that would be prudent or wise. Certainly I know that I am one of those who is risk adverse. Indeed, I think I should be listed amongst the frightened - certainly when it comes to fiscal matters. I should perhaps mention that I was involved in the Icesave disaster but happily got all my monies returned under the last Labour government for which I will be forever appreciative.

I have recently met with one IFA - a nice lad - who showed me a low risk plan from the Financial Services organisation he represents/is associated with. I have not gone on to the second level of the meeting. He said I could easily take 4% on a monthly basis from that plan and that the risk would be low. It's not that I don't believe him. I do. It's just that I had one bad experience with an fiscal investor earlier in this century. They were well known and made all kinds of promises. They had been recommended to me by a well respected colleague. They told me to invest my money with them and let it settle in/grow for the first six months. For the first bit it did increase ... and then it went down. I was patient for a bit - but because I depend on these monies for income - I could not afford to wait too much longer. In the end I simply sold up and lost £5,000. It has, I fear, made me shy of these kind of advisors.

I'm looking for advice. What do you think I should do? Any ideas in principle would get gratefully received.

Thanks so for your kind consideration.

(I'm sorry if this sounds simplistic ... I guess that's just me.)

jimjames

The worst thing is to panic and sell when something is low.

If the main requirement is income then the capital value at any one point is irrelevant. Some investment trusts have grown the income they pay for at least the last 40 years, that's income going up year on year for 40 years regardless of what the stock market has done over that time. So even if the market dropped 30% one year the income was still increasing.

If you are putting savings in 5 year fixed term accounts then it would seem to make sense to put at least some into investments that can grow through retirement. There is no reason to put all your money in the same thing so you can split between cash and investments in proportions you are happy with.

fizio

I find the high yield dividend funds a safe bet and even better via a low cost ETF

DiggerUK

Savings were one of the ways that Digger Mansions grew it's savings.....till less than a decade back.
We never went with Icelandic or Indian savings a/c's. Caution showed us that there was no government protection......and you say your cautious!
It is a bit of a pipe dream to believe that rates are rising any time soon, the banks would not be able to stay afloat without their cheap lifeboat from quantitative easing.
So, what do you do. All I can say, is that we are similar, in age and assets, to yourself.

Your experience with IFA's, should mean that a return to their sweet talking ways is a non starter. Ask your 'very nice lad' if he will guarantee the 4%.....or even 3%..., or failing that, 2%. He takes no risk, just your money. Turn round, walk away.

What we did when we realised the world was going to change was move in to gold for our retirement savings. By a huge percentage, something that may not appeal to you. But I urge you to look at protecting anything you won't need for 5+ years in this way. It's at a very low price at the moment.

If you are going to invest in equities, then a gamble with european equities is possibly the best option. They are starting their own expansion of the money base, which if it 'rhymes' with what happened with QE elsewhere will lead to a sugar rushing bubble.

But then what do you do? That will crash sooner or later as far as I am concerned. You have enough to live on till the grim reaper comes, just figure out how to protect it.

Best of fortune..._

coyrls

Does this look like a low risk investment? When did you realise the world was going to change? I hope that it wasn't in 2011.

bigfreddiel

Gold -hehehe no way

Split your portfolio 50/50 high yield equities/etf's global/UK property/ gilts

Income from high Lydia growth from etf's

Works for me 15% growth each year for a while now

Fifteen yrs ago unemployed with only £70k

Now £800k own 5 bed detached house £12k pension/wife £10k pension

And the £800k income is being reinvested - no need for it right now

And I was only a civil servant, wife with NHS thus the pensions.

Neither of us has ever earned more than £30k

Simples

fj

colsten

bigfreddiel wrote: »

Income from high Lydia growth from etf's

Is Lydia your regular girlfriend?

atush

What we did when we realised the world was going to change was move in to gold for our retirement savings. By a huge percentage, something that may not appeal to you. But I urge you to look at protecting anything you won't need for 5+ years in this way. It's at a very low price at the moment.

Guess you haven't been living very well these last few years as gold plummeted? and why tell someone who wants income to use a non income bearing investment?

You are bonkers

atush

jimjames wrote: »

The worst thing is to panic and sell when something is low.

If the main requirement is income then the capital value at any one point is irrelevant. Some investment trusts have grown the income they pay for at least the last 40 years, that's income going up year on year for 40 years regardless of what the stock market has done over that time. So even if the market dropped 30% one year the income was still increasing.

If you are putting savings in 5 year fixed term accounts then it would seem to make sense to put at least some into investments that can grow through retirement. There is no reason to put all your money in the same thing so you can split between cash and investments in proportions you are happy with.

I agree with Jim and recommend putting at least some of your money into some good stable income bearing ITs with long Div history.

As a side note, why no pensions? As it is you could put 3K PA into one and add on TR (your total income).

I would keep each years cash in an interest bearing CA too.

Wilkins

I agree with atush. If you remain completely in cash you are going to lose income over the next couple of years at least. I would suggest diversifying some of your capital into low cost ETFs and long established investment trusts. You should be able to secure yields of around 4% for only a small increase in risk.


You might also consider putting some money into P2P outfits like Ratesetter or Zopa.

Pincher

Alas, Baby Boomers are sitting on a vast amount of cash, and most of them don't know what to do with it. My hunch is this money is going to fuel a boom up to 2018, and then there will be a big correction.


Why 2018? It's simply busts tend to happen in years ending in 8.


Up to that time, everything will go up so it doesn't matter what you buy. Buy some oil shares, if you are brave. If this theory holds, you should profit take in 2017, and buy gold, which will go up in 2018 when everyone is running for cover.